Despite savings from recently enacted pension reforms, the State of Illinois’ finances could still worsen considerably after income tax increases are partially phased out as scheduled beginning in 2015, according to a report by Governor Pat Quinn’s office. The three-year general operating budget projection by the Governor’s Office of Management and Budget (GOMB) and an accompanying economic and…
States inevitably face lawsuits when they attempt to ease budgetary pressures by cutting pension payments to current employees and retirees. While the legal battle over Illinois’ new pension law has just begun, courts have already issued rulings on similar pension changes in other states. Like Illinois, other states have enacted pension laws that rely on savings from reductions in annual benefit…
The following posts were among the most highly read on the Institute for Illinois’ Fiscal Sustainability’s blog in 2013 and represent some of the most closely followed Illinois fiscal issues this year: Analysis of Pension Reform Proposal Shows Significant State Savings January 3, 2013 This blog examines a pension reform proposal introduced in the Illinois General Assembly late in 2012 by a…
On December 18, 2013, the Illinois General Assembly held its first hearing on the plan to apply for a federal waiver to overhaul the State’s Medicaid program. State officials plan to submit an application to the federal government by the middle of February 2014. A draft of the proposal—scheduled to be posted for comment on January 5—is likely to be delayed because of continuing work on the…
The pension plan enacted by the State of Illinois on December 5, 2013 may preserve more of the benefit increases for current employees than is widely assumed, due to a provision of the new law that ties benefit growth to inflation. As discussed here, the new benefit increase is based on years of service and a multiplier that starts at $1,000 for a retiree not covered by Social Security ($800 for…
After decades of dire warnings and several years of legislative negotiations, the Illinois General Assembly on December 3, 2013 passed comprehensive pension reform legislation and Governor Pat Quinn signed it into law on December 5. The legislation is designed to scale back the State’s massive pension obligations while preserving its retirement systems. Supporters estimate that the plan will…
The following opinion piece by Civic Federation President Laurence Msall was published by Crain's Chicago Business on December 4, 2013. Decades of dire warnings and several years of legislative negotiations culminated yesterday afternoon with the passage of comprehensive state pension reform legislation in both houses of the Illinois General Assembly. Gov. Pat Quinn has indicated that he will…
Legislative action on reducing the State of Illinois’ massive pension obligations could come as soon as next week, but the details of the latest pension reform proposal and its potential impact on the State’s financial condition have not yet been made public. On November 25, Illinois House Speaker Michael Madigan’s staff reportedly notified House members that they will be back in session on…
The State of Illinois plans to apply for a sweeping federal waiver to overhaul its Medicaid program, according to a draft concept paper issued on November 7, 2013. The waiver proposal, called Path to Transformation, covers all of the State’s Medicaid spending and all of the populations that are currently eligible or may be eligible under the federal Affordable Care Act. It would allow Illinois…
The State of Illinois will need to contribute somewhat more to its five retirement systems in FY2015, but the growth will be less than previously projected due mainly to strong investment returns. Pension contributions required by State law will increase by $103.5 million, or 1.5%, to $6.9 billion in FY2015 from $6.8 billion in FY2014, according to preliminary certifications by the five systems…
